Before opening up a cosmetology school, Kevin La had no experience with beauty. He had been in the residential real estate business, helping customers obtain mortgages for their homes and helping them manage their properties. But seven years ago, he learned that a lot of Vietnamese-owned cosmetology schools were closing in the San Diego area. It became hard for Vietnamese immigrants to get the training and hands-on practice they needed for their licenses. “They either had to take a class in a beauty school in English or drive all the way to Orange County,” said La.

La, who came to the U.S. as a 10-year-old himself, knew how important education was to an immigrant’s success, so he and his wife switched paths and in 2019 opened the Jasmine Beauty School in San Diego’s University Square shopping center. The school focuses on affordable and quality education.

La spoke with ICSC Small Business Center contributing editor Rebecca Meiser about securing financing, the unexpected challenges when starting a business and what he knows now that he didn’t then.

Financing is the lifeline of any small business. What were the primary sources of capital you explored and how did you eventually secure the financing?

Initially, we used our own capital, our own savings, but then we realized this wasn’t going to be that easy and we had to get some more financing, so we had to apply for loans. I went to my bank, Wells Fargo, first. And the manager that works there, who I’m close with, advised me that I should apply for loans backed by the Small Business Administration first. We could do that because we only needed a small amount of money to keep the ball rolling, and we learned that SBA loans have low-interest rates and affordable monthly payments. That was good for a start-up business like us.

MORE FROM THE ICSC SMALL BUSINESS CENTER: Easier Access to Capital for Rural and Minority-Owned Small Businesses

How much did you request from government loans?

I think it added up to about $100,000.

What did you learn from applying for a government loan that you didn’t know before?

You have to have all the proper paperwork, documents and all your tax returns ready. Unlike other business loans, SBA loans look at an owner’s personal finances, and lending institutions process the loan so you have to apply through them, not the SBA itself. We used a bank that was not Wells Fargo. [For the loan application], you have to prepare and draft up a five-year plan. Everything has to be clear for the underwriters to review. It was more time consuming than I thought it would be. For example, with the financial statement, I had to request my CPA to draft that, and with the financial plan, I had to sit down and think about and write it out. That took me around two weeks, but we were able to produce everything that the lenders requested.

Would you suggest new small business owners seek out SBA loans first?

Yes. Even though it takes longer for government loans to get approved, if you stay patient, it will be worth it. With a start-up business, you don’t want to pick up private loans because the interest rate is higher, even though they get back to you quicker and there’s less paperwork. And with bank loans, the repayment is higher. When you are starting a business, you don’t want to just jump in right away and have this burden on you.

What were some challenges or unexpected obstacles? How did you overcome them?

Originally, we were going to start small: maybe have 25 students and two or three instructors. I thought I’d be handling all the administrative work and maybe hire a receptionist, but once we announced the school, a lot of people wanted to enroll, something like 200 students. We had to hire more people to help with the students, and we ended up leasing out two suites, about 4,500 square feet. I ended up quitting my other job and working full-time at the school, but we were making good money. The next challenge came during COVID. We had to shut down for almost five months, and that was tough. We didn’t have any revenue, any income. That’s when we had to adjust. We had to write up an [online] teaching curriculum to the government in order to continue our business. The state didn’t allow us to have in-class education for everybody, and we had to buy [personal protective equipment] and other COVID-prevention supplies. We applied for Paycheck Protection Program loans, and we got the SBA’s [COVID-19] Economic Injury Disaster Loan, and that took us through the tough time.

You gave up your lucrative real estate career to fill a hole in the community. What motivated you to do that? Was there anyone specifically you knew who was affected by the closure of other cosmetology schools?

I didn’t have connections with people in cosmetology school. It was more about making a difference. I had a successful career in real estate, yes, and I made a lot of money, but it wasn’t fulfilling. There was still something missing, and I guess education now is my calling.

What advice would you give to someone thinking about starting a business?

Have at least some kind of personal savings to start. How much depends on what sort of business you’re in. For example, if you were going to open a simple restaurant, you would need about $40,000 to 50,000 in cash to prepare. But there are always many unexpected turns you need to prepare for. My wife and I originally put in $100,000, and we thought this is going to be good. But [with unexpected things like COVID] — where we still had to pay our rent, our bills our employees — we’ve now put in more than $1 million dollars into the school.

Where do you want to be in five and 10 years?

In five years, I think I’m still going to be here, even though I’ll have more gray hair. In 10 years, I  see myself still having the school but having other good people running it for us.